Part time and pensions(12 Posts)
I know I will probably need financial advice but they will just say you will have to decide.
I am about to drop to 0.6 and I am wondering if I should top up my pension to full time equivalent (can it be done?) or get an additional private pension.
You can't top your teachers pension up to FTE unfortunately. So what this means is that over 10 years working your contributions will only be equivalent to 6 years service. This will be a severe penalty when your final pension is calculated. So it depends how long you're thinking of going part time for. If for a couple of years then it's not a huge consequence, if it's the next 20, then you're credited for only 12 years service. I hear very mixed things about the AVCs run by The Prudential. I am personally saving into an ISA in order to save the difference.
I am part time and I have opened a sipp with Hargreaves lansdown. I don't know how much you know about pensions but it is a private pension you choose where you want to invest. The benefit for me is I can choose how much to invest each month and I can vary it. You can start from as little as £25 a month and access it at 55 which is my plan as there is no way I will be teaching until 65. You can access your teachers pension at 55 but it is heavily reduced. I went down this route as think I will be fine with my teachers pension, previous local govt pension at 65 but I am now focussing on trying to build up money so i can retire asap. With the sipp you also get tax relief added to your savings which they do for you.
If you are in the career average scheme in teachers pension you can also elect to pay more as faster accrual rate so it's not AVCs but a higher percentage. So instead of accruing at 1/57 each year you can do 1/55 or 1/50. You have to elect to do this annually. What this means is they take a extra % payments out your salary monthly. I did this last financial year but not this as I am now going down the sipp route.
If you have not done so I would recommend registering online with teachers pension to look at what you have already accrued and there is quite a bit of information on there. It tells you what scheme you are in and you can see what you are currently entitled to.
Hope this is clear it's a subject I'm a bit obsessed about at the moment!
Very interesting. I am also obsessed with this as my mum has really struggled in retirement and I don't want to be her! I also want to retire at 60 not 67 or 68. I just can't imagine full days in school st that age.
My understanding was that you only had one chance at altering your accrual rate not a yearly chance. Are you sure on that? I also thought that if you had an occupational pension, then you didn't get the same tax relief on a SIPP.
Ok have just logged on and seen that I can increase accrual. Can you explain exactly what that means please.
Do you think it's worth it is what I really mean. Why did you go down sipp route instead?
Thanks for the extra detail.
I don't think I am due to retire until 68 but there is no way I will make it until then. I know nothing about pensions but as a couple DH and I need to sit down and work out our pensions, life and up date our wills. Being an adult is not as exciting as I imagined as a child.
Hi I think the one time opt in you are referring to was the buy in to get your pension at 65 instead of 67. You could only do this once some time ago
You have to opt in annually for faster accrual you have missed the boat for this year. It is under the flexibility section. There is a calculator on the site if you click on calculators and then the flexibility one it should give you an idea.
I would recommend ringing the teachers pension agency they were quite helpful when I rang them. They will tell you the options you have. I did it last year and only did the 1/55 the lowest one. They took about £39 extra out of my salary before tax each month and my pension went up probably by an extra £200 annually I would estimate. Not great but it's guaranteed money which is what you are paying for. Whereas if you invest in a SIPP you are investing in the stock market and it is not guaranteed.
I think you need to have an idea of how much you think you will need in retirement: a study this week said a couple needs £26k to have a decent standard of living in retirement. So for me including my state pension and teachers and previous pension I think I will have enough when I get to 65/67.
However there is no way I will be teaching anywhere like that long so my priority is to build up money which I can take flexibly from 55 onwards which you can do with a sipp. I put in money each month to be invested and I then get the tax refund added so my aim is to accumulate as much as poss in this. I could do this by paying in extra to teachers pension but if I took that early at 55 you are heavily reduced. If you look on the teachers pension site there is a calculator which you see how much you will get if you take it early. I also like the fact I can decide where to invest my money and how much with the sipp. I can see how much the pot is growing and it's nice to see it has made 20% interest so far. For me when I looked at how much my teachers pension would be reduced if I took it early I thought it was too much. There is a lot to think about but I guess at the end of the day if you are saving money that's a good thing whether into a sipp or teachers pension.
You could also consider an ISA but you don't get the tax refund with that.
I hope this helps I am not an expert but just done quite a lot of reading on it trying to formulate a get out plan!
Thanks very much for your reply. Much appreciated. I was actually on another thread about this (no boring sex talk threads for me!) and received some advice about AVCs. You also receive a tax incentive there and I hadn't realised that you can choose your own funds so I may pursue that avenue instead. Did you consider that route?
Thanks. This is too much for me to take in on a Saturday night so I will have to come back to it.
As for how much we need to retire on, I am finding it difficult to view the future. I am 33 and hope to have another child so I probably need to keep working until they finish uni. My DH has an illness which means he will probably die younger than average, and may have to give up work early but then he may not.
Re AVCs I don't like them as they charge higher amounts for poorer performance if it is still the Prudential one. Obviously that's my personal preference but I don't want to give any more of my hard earned cash in charges than I have to. I would recommend looking at the annual charges to compare. They may have changed from when I last looked.
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